14 October 2025
Africa is experiencing a surge in interest from data centre investors, driven by the continent’s rapid digital transformation. However, despite this growing enthusiasm, the sector faces significant hurdles rooted in structural issues, according to a recent report by the Africa Data Centers Association (ADCA).
In early October, Raxio Group celebrated the opening of a $30 million data centre in Angola, marking a key milestone in its expansion efforts supported by $100 million in funding from the International Finance Corporation (IFC). This development underscores the increasing investment activity in Africa’s promising data infrastructure sector.
Currently, Africa’s share of the global colocation data centre market remains under 2%, with more than half of this capacity concentrated in South Africa, as noted in an Oxford Business Group report published in April 2024. Industry estimates suggest that the continent requires around 1,000 MW of additional capacity and approximately 700 new facilities to effectively meet rising demand. Revenue projections from the African data centre industry further highlight its potential, with figures expected to reach $12.63 billion by 2030, up from $8.96 billion in 2025, according to Statista.
Despite the positive outlook, the sector faces persistent challenges. A 2025 survey by ADCA reveals that obstacles such as energy reliability, skills shortages, regulatory uncertainty, and access to capital vary across countries but tend to hamper growth overall. The shortage of skilled professionals is identified as the most pressing issue, scoring 2.74 out of 5, with Nigeria and South Africa experiencing the most acute shortages. Power supply reliability is another major concern, with a score of 2.81, particularly affecting Nigeria and South Africa, while countries like Côte d'Ivoire, Senegal, and Kenya face fewer issues in this area. Regulatory uncertainty also remains a significant barrier, especially in Kenya and Nigeria, with an average challenge score of 2.97. Access to capital is frequently cited as another major obstacle.
The report emphasises that, despite strong demand fundamentals, infrastructure development depends heavily on overcoming deep-seated country-specific constraints, including skills shortages, unstable energy supplies, and unpredictable regulatory environments. These issues are compounded by other sector-specific hurdles, such as lengthy permitting processes, land zoning disputes, environmental standards, high import costs, and complex legal frameworks, as highlighted in a May 2025 report by Xalam Market. High capital expenditures pose a further challenge, with establishing Tier III or Tier IV data centres requiring substantial investment in real estate, cooling infrastructure, power supplies, and fibre connectivity. Power reliability issues compel operators to rely heavily on diesel generators, escalating operating costs. Additionally, inconsistent regulations across African nations, coupled with high import duties and administrative barriers, slow deployment timelines and limit growth opportunities for smaller operators.
To address these challenges, stakeholders are exploring various solutions. Industry players are increasingly adopting strategies such as signing renewable energy power purchase agreements (PPAs), building facilities near energy sources, producing their own renewable power, and investing in innovative cooling technologies to boost energy efficiency. A study by Intelligent CIO notes that investments in renewable energy sources, like on-site solar plants, are improving power reliability, supported by green economy policies. Advanced cooling solutions such as liquid cooling and free cooling are also gaining traction for their environmental and efficiency benefits. Moreover, modular data centres — prefabricated units that can be quickly deployed and scaled — are becoming popular for reducing costs and deployment times, while high-capacity storage options like HDDs and SSDs are fundamental to supporting diverse digital services.
Policy reforms and digital infrastructure development are equally vital in fostering growth. Countries like South Africa, with its ‘National Development Plan 2030,’ Kenya’s ‘National Broadband Strategy,’ and Egypt’s tax incentives for hyperscalers, are creating more favourable environments for foreign investment and easing regulatory hurdles. Collectively, these measures aim to accelerate Africa’s digital infrastructure expansion, unlocking the sector’s full potential despite the ongoing challenges.
